Question:
Find the amount to be paid if James borrowed a sum of $5000 at 8% simple interest for 7 years.
Correct Answer
$7800
Solution And Explanation
Solution
Given,
Principal (P) = $5000
Rate of Simple Interest (SI) = 8%
Time (t) = 7 years
Thus, Amount (A) = ?
The Rate of Interest is always calculated per annum, i.e. per year.
Thus, here 8% simple interest means, Rate of Simple Interest (SI) is 8% per annum.
Method (1) Using Formula
Calculation of Simple Interest
Formula to Calculate Simple Interest
Simple Interest (SI) = Principal × Rate × Time
Thus, Simple Interest (SI) = $5000 × 8% × 7
= $5000 ×8/100 × 7
= 5000 × 8 × 7/100
= 40000 × 7/100
= 280000/100
= $2800
Thus, Simple Interest = $2800
Calculation of Amount
The total money paid to the lender by a borrower is called the Amount.
In other words, sum of priciple and interest is called the Amount.
Formula to Calculate the Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2800
= $7800
Thus, Amount to be paid = $7800 Answer
Method (2)
Calculation of Amount when Principal, Rate of Simple Interest and Time are given
Calculation of Amount directly using Principal, SI, and Time
Formula to calculate the Amount
Amount (A) = Principal (P) + Principal(P) × Rate of Interest (SI) × Time (t)
⇒ A = P + PRT
Here in the question, P = $5000
Rate of Simple Interest (SI) or (R) = 8%
And, Time (t) = 7 years
Thus, Amount (A)
= $5000 + ($5000 × 8% × 7)
= $5000 + ($5000 ×8/100 × 7)
= $5000 + (5000 × 8 × 7/100)
= $5000 + (40000 × 7/100)
= $5000 + (280000/100)
= $5000 + $2800 = $7800
Thus, Amount (A) to be paid = $7800 Answer
Method (3) Unitary Method
Calculation of Amount using Unitary Method
Calculation of Interest using Unitary Method
Here, given Rate of Simple Interest = 8%
This, means, $8 per $100 per year
∵ For $100, the simple interest for 1 year = $8
∴ For $1, the simple interest for 1 year = 8/100
∴ For $5000, the simple interest in 1 year
= 8/100 × 5000
= 8 × 5000/100
= 40000/100 = $400
Thus, simple interest for 1 year = $400
Therefore, simple interest for 7 years
= Simple interest for 1 year × 7
= $400 × 7 = $2800
Thus, Simple Interest (SI) = $2800
Calculation of Amount
Amount = Principal + Interest
Thus, Amount = $5000 + $2800
= $7800
Thus, Amount to be paid = $7800 Answer
Similar Questions
(1) Lisa took a loan of $6100 at the rate of 6% simple interest per annum. If he paid an amount of $9394 to clear the loan, then find the time period of the loan.
(2) Calculate the amount due if Elizabeth borrowed a sum of $3450 at 7% simple interest for 4 years.
(3) Calculate the amount due after 10 years if Thomas borrowed a sum of $5800 at a rate of 6% simple interest.
(4) Calculate the amount due if Robert borrowed a sum of $3100 at 4% simple interest for 4 years.
(5) Margaret took a loan of $6700 at the rate of 7% simple interest per annum. If he paid an amount of $9983 to clear the loan, then find the time period of the loan.
(6) Find the amount to be paid if Elizabeth borrowed a sum of $5450 at 9% simple interest for 7 years.
(7) Calculate the amount due after 9 years if Christopher borrowed a sum of $6000 at a rate of 4% simple interest.
(8) Find the amount to be paid if Karen borrowed a sum of $5950 at 10% simple interest for 7 years.
(9) How much loan did Ashley borrow 5 years ago at a rate of simple interest 3% per annum, if he paid $7532.5 to clear it?
(10) Calculate the amount due if Karen borrowed a sum of $3950 at 10% simple interest for 4 years.